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I Have Seen Wuhan's Future And It Is In Downstate Illinois
2008-11-13 06:51:00
So maybe spending three days with the in-laws in rural Central (a/k/a downstate) Illinois has diminished my faculties a bit (certainly having to use dial-up AOL did affect my mood), but what I saw there, along with my conversations with fellow blogger, Steve Dickinson, who just returned from Wuhan , China, have convinced me that Wuhan is the next Central Illinois. First a bit about Central Illinois. I was mostly in Peru, IL, population I-80, which links the West Coast to the East Coast. If one were to weight each mile of I-80 based strictly on population, I am guessing Peru would fall pretty close to the middle. It is also very close to countless other major highways, close to O'Hare airport (the second busiest US airport), near various train stations, on the Illinois River, and right in the heart of US industry. In other words, it is perfectly located in terms of logistics. Peru is now taking advantage of its central location, along with its relatively low labor costs, an...
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China Shipyards -- Buying Opportunities Amidst The Rubble?
2008-11-11 20:20:00
The following is Steve Dickinson's second day report from the 2008 Maritime Conference he is attending in Wuhan, China . Today I acted as the moderator (in Chinese) for a series of presentations on ship financing. As with yesterday's discussion on shipbuilding, the presenters were mostly experienced lawyers from Hong Kong and Singapore. Much of the presentation dealt with technical issues related to the common law and international law of ship financing. However, the underlying key to the presentations was: -- Ship financing is the foundation of the ship building, ship conversion and ship sale business. -- Traditionally, banks have provided this financing. Alternative forms of financing exist, but have never worked well in the maritime business. -- The current financial crisis has virtually closed the door on traditional bank financing. This door will remain closed for the near future, possibly as long as one year. In my role as moderator, I then posed the followi...
More About: Buying , Opportunities

China As Downturn Neophyte. If I Stick My Head In The Sand....
2008-11-08 08:05:00
CLB's own Steve Dickinson has just returned from the annual China Maritime Law Conference, made up mostly of China's leading maritime lawyers. This year's conference was in Wuhan. Steve reports as follows after the first day: I just finished the morning session of the first day of the All China Maritime Law Conference being held in Wuhan. The theme of this year's meeting is the shipbuilding industry. The conference was organized when Chinese shipbuilding was booming and China had plans to replace Korea as the leading shipbuilder in the world. Due to the recent economic downturn, virtually every presenter revised their presentation at the last minute to discuss the effects the current situation is having and will have on the maritime industry in China. The presenters all agreed on the following. The downturn in shipping is having a profoundly negative effect on all segments of China's maritime industry. Shipbuilders are finding that their shipbuilding contracts are being ...
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China Products. Be Gettin' 'Em While The Gettin' Is Good.
2008-11-06 20:45:00
So I just had an interesting conversation with a client today. This client manufactures really big things in China (sorry, I have to be so vague here) under his company's name and then sells these big things in the US. He was bragging about how good business has been for him lately. How can that be, I asked. Aren't your sales down? A little he replied. Around ten percent. Well then, why are you talking about things being so good? Dan, it's like this [recapped, not word for word]: -- The cost of the materials for my product has plunged. -- The production costs for my product have plunged. -- My VAT rebate has increased. -- I have been getting killer shipping rates. "Killer," he repeated, with obvious glee in his voice. "So yeah, sales are down a bit, but my profits are up....you still serious about gathering up a buying expedition to Iceland?' For more on the massive decline in shipping rates from China, check out, "The Impact of the Massive drop in China Shipping Rat...
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China Maritime Law Conference. Wuhan, November 8-9.
2008-11-06 15:36:00
The 2008 China Maritime Law Special Topic Research annual meeting will be in Wuhan , China, this weekend, November 8 and 9. The conference will be at the absolutely gorgeous Shangrila Hotel in Wuhan. The meeting is jointly sponsored by the All China Bar Association Maritime Law Section, the Yangtzi River Maritime Law Association, The Hubei Province Bar Association, The Hubei Province Vessel Construction Trade Association and The Wuhan City Bar Association. This will be the first time this annual meeting will be held in an inland city. The following topics will be discussed: -- Legal issues relating to vessel construction. -- Shipping contracts and customs issues. -- Disputes arising from the release of cargo without a bill of lading (my firm is involved in a case on that in China right now) -- Insurance issues arising from transport of dangerous cargo. In addition to maritime lawyers, the meeting will draw attendees from all areas of legal and business life in China concerned ...
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"Fly Me." Airplane Seizures In China And Why This Is Important:
2008-11-06 11:47:00
Bear with me here non-lawyers as I promise there will be some manna for you at the end. Just read a very good article in International Law Office by Harvey Lau of Baker & McKenzie (and no, my firm is not and has never been in merger talks with Baker & McKenzie, though we are honored by the rumors), on airplane seizures/arrests in China . The article is entitled, "Ratification of Cape Town Convention to Boost Finance" [free subscription required] and it talks about how "the National People’s Congress just ratified the Convention on International Interests in Mobile Equipment and the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment, known as the Cape Town Convention, which China signed in November 2001." This convention is expected to become law in China in early 2009. So why am I telling you all this? Again, bear with me here. The article describes how this ratification will better protect airplane lenders an...
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Barack Obama: The China View
2008-11-06 06:41:00
The Wu Way blog, provides the best analysis I have seen on how China views last night's election of Barack Obama as America's next president. The post is entitled, "How does China view an Obama Presidency…what does China think of Obama?" and it sees China (to the extent one can generalize about 1.3+ billion people) as "excited about the election as a historic moment, but also cautious in their concern that he may be more protectionist." It is well worth a read. UPDATE: China Beat also does an excellent job on this in its post, "Obama Elected, China Reacts." FURTHER UPDATE: This does not exactly fit here, but I liked it so much and it is election related, so here goes. I just read an excellent article over at Spot-On, by Jeanne Jackson, entitled, "The Day After." The article, and, in particular, the following paragraphs, summed up better my feelings than even my own feelings, and certainly better than anything I could write myself: Perhaps you are celebrating today. Or...
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What Every Buyer Of China Product Must Do BEFORE Buying.
2008-11-05 21:46:00
David Dayton over at Silk Road International sets out what every buyer of China product must do before buying product from or having product manufactured in China. A summary of Silk Road's list: 1. Pay $150 or so and get a report on your company before you send any money over to China. David mentions using Verify or Glo Bis for this. These reports will usually tell you if the company to whom you are about to send so much money actually exists and is operating legally. I would also suggest that you do an internet search (in both English and in Mandarin) on the company from which you will be buying to see what others are saying about it. 2. Second, pay another $800 or so to get your factory audited. Dayton's company, Silk Road International, does this. The audit will confirm that the factory from whom you will be buying actually has the capability to provide you what it says it will provide you. 3. Get your potential supplier to give you the names of others, preferabl...
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President-Elect Obama Quotes CLB In Acceptance Speech. Well Sort Of.
2008-11-05 07:10:00
"To those who would tear the world down --- we'll defeat you. To those who seek peace and security -- we support you." President -Elect Barack Obama , During his acceptance speech I like this division of countries and it corresponds with the argument I have often made as to why the United States should seek to work with China, not against it. Most countries in the world (please don't anyone ask me to distinguish between the citizenry and the government here) want progress. They want tomorrow to be better than today. They want a strong economy and a productive work force. They want cars, televisions, and iPods. China is one of those countries. I am not calling on the United States to ignore China as a security threat, but I am saying we should support those countries that manifest a greater desire to build than to "tear the world down." And through our doing so, we will help defeat countries like Iran and North Korea, which are, at least for now, more committed...
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China: When Cultural Differences Matter.
2008-11-05 03:20:00
Regular readers know that I am not a big fan of going overboard on the need to know Chinese culture to do the typical business deal. Better to be a good businessperson than to know what color flowers to bring to a funeral. But, in other contexts, like managing an enterprise, or selling consumer products, culture can be everything. An article in today's Wall Street Journal, entitled, "Lenovo Goes Global, but Not Without Strife," does an excellent job in highlighting this. The article is about Lenovo, but it is really about how cultural differences between the West and China can impact the workings of a business. No doubt, anyone who has done much East-West business will be able to relate to at least some of the following: -- "You don't want everyone saying 'Yes, Yes, Yes' all the time," says Mr. Amelio, a brawny former college wrestler. "You want them to be able to smack you upside the head and say 'Hey, I've got a better idea.'" -- Conference calls were difficult as ...
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Everything You Always Wanted To Know About China's Carbon Markets.
2008-11-03 12:07:00
In its post, "China Carbon Forum 2008 Review," The Green Leap Forward blog provides an in-depth review of the China Carbon Forum, along with an excellent overview and prognosis of China's primary and secondary carbon markets. I recommend this post to anyone interested in learning more about China's carbon markets.
More About: Markets , Wanted

These 15 Chinese Cities Are Everywhere You Want To Be.
2008-11-03 09:58:00
Mastercard recently came out with its list of the 65 key cities driving growth in emerging markets worldwide. Fifteen Chinese cities made the list. (h/t China Business Blog) The top ten cities worldwide were as follows: 1 Shanghai China 2 Beijing China 3 Budapest Hungary 4 Kuala Lumpur Malaysia 5 Santiago Chile 6 Guangzhou China 7.Mexico City Mexico 8 Warsaw Poland 9 Bangkok Thailand 10 Shenzhen China I like that list. The fifteen Chinese cities that made the list are as follows: 1 Shanghai 2 Beijing 6 Guangzhou 10 Shenzhen 16 Xiamen 17 Chengdu 18 Dalian 20 Tianjin 20 Nanjing 22 Hangzhou 23 Wuhan 24 Chongqing 25 Qingdao 26 Xian 27 Harbin Mastercard's listing report is actually quite good, as it goes well beyond the typical world city list by actually doing a good job explaining its criteria and by setting out all kinds of sub-lists. And though I might quibble a bit about the ranking of China's cities, I cannot think of even one that was unfairly left out. ...
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A China Real Estate Overview. What Next On Prices?
2008-11-02 17:49:00
Figuring out future real estate prices in China is "above my pay grade," but for those interested in an in-depth review of the current thinking on this issue, I recommend you go to the China Economics Blog post, "Housing Crisis in China: An overview." The post sets out an all-star lineup of articles on China real estate, pulling from Forbes, The Economist, The International Herald Tribune, The Wall Street Journal, and Danwei. The consensus is that things are not good.
More About: Estate , Real Estate , Real , Overview

America, China, And The World. We're No. 1.
2008-11-02 08:33:00
As good a foreign policy article as you will find in a US newspaper is a piece is by Washington Post "World Columnist," Robert Kagan, entitled, "Still No. 1." I learned of this article from foreign policy expert Thomas P.M. Barnett, who stated he agreed "with it 100%." I do too. What do you think?
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Ten Ways To Take Your Business Global (To China Too). A Podcast.
2008-11-02 08:02:00
Laurel Delaney of The Global Small Business Blog was on blogtalkradio the other day talking about 10 ways to take your business global. Ms. Delaney is one of the foremost experts on taking small businesses global and she shares a lot of good information in her thirty minutes here. Ms. Delaney then summarized and added to her talk on her blog, as follows: Reasons for going global (not covered on the show): • Increases sales and profits. • Augments competitiveness. • Earns a greater return from a set of core competencies. • Generates economies of scale in production. • Enhances local competitiveness and opens up the way to larger, more lucrative customers. • Create jobs, productivity growth, and wealth. • Enlarges the pie of potential investors. • Insulates seasonal domestic (local) sales by finding new foreign markets and selling excess production capacity. • Cuts costs through global outsourcing. • Reduces dependence on existing markets. • Capitalizes on ...
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Barak Obama And Krispy Kreme Want To Get Into China's Business. But W
2008-11-01 17:39:00
Two things the United States should not be exporting to China right now are our economic mess and our fat-laden diet. Yet, Barack Obama and Krispy Kreme are planning/seeking to do exactly that. In a Wall Street Journal story, entitled, "China-Trade Issue Thrust Into Races as Vote Nears," (h/t to China Journal) Obama makes clear that he believes the United States should be dictating to China what China should be doing with its own economy: In a letter released Wednesday by the National Council on Textile Organizations, a trade group, the Illinois senator vowed to address industry complaints that China is manipulating its currency to gain a competitive advantage in the global marketplace. Sen. Obama said China's massive trade surplus with the U.S. is a direct result of "manipulation of its currency's value," and stressed "China must change its policies, including its foreign-exchange policies." Sen. Obama said China's economy must rely less on exports and more on domestic dem...
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China Dairy Farming The American Way
2008-11-01 15:10:00
Interesting post at MSNBC World Blog, on an American -style dairy farm in China . The post is entitled, "Dairy Farming American-Style in China," and it does a nice job setting out how to operate a business in China that produces quality product. Not as in depth as I would have liked, but certainly well worth the read.
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China Is In A Pre-Consolidation Stage, But No Billy Joel Please.
2008-10-30 15:31:00
China Business Blog and Podcast has a great post up on what it calls China's pre-consolidation stage. The post is entitled, "Signs: Observing the pre-consolidation stage in China," and its gist is as follows: But I think there are some signs that are quite clear that are telling us what stage we are at in China’s growth — and one of the defining features of this stage is what I call “pre-consolidation,” meaning, generally, that many industrial sectors in China are still very diverse, fragmented and messy but are in the process of becoming more aligned and streamlined. Instead of trying to further describe this stage, I would like to look at four “signs” that define what I am calling “pre-consolidation” and signal that we might be coming to a crossroads. First of all, the biggest sign — and the easiest to recognize — is simply the number of players in many market sectors in China. One of the features of a more mature economy is that there have emerged several ...
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Everything You Always Wanted To Know About China Trade Shows.
2008-10-30 13:15:00
Chris Carr over at Cal Poly MBA Blog just did a post on trade shows in China , with a lot of really good and helpful links regarding the same. The post is entitled, "Visting a Trade Show in China," and in it, Chris rightly points out how "trade shows are a much, much more prominent marketing and promotion channel [in China] than in the US" and how "when that day comes when you have the opportunity to attend a trade show in Asia, you MUST grab that opportunity.' All I will say is that I have done my time.
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China's Upcoming Circular Economy Law. What Goes Around..... Well, No
2008-10-30 07:55:00
CLB co-blogger Steve Dickinson wrote the following article for the China Economic Review. Steve is the monthly legal columnist for the Review, which BizCult rightly raves about today in its post, entitled, "China Economic Review: In Review." Steve's conclusion: As written, this law is no big thing: For all the hype about recycling,the purpose of China’s Circular Economy Promotion Law (CEPL) is not to reduce waste. The primary goal of the legislation, which was approved in late August and comes into effect on January 1, is to deliver energy efficiency. Misinterpretations in the West are understandable: Circular economy laws in developed countries tend to be concerned with recycling as a form of pollution control and waste management. But China is different. Energy conservation and recycling are viewed from the standpoint of contribution to efficiency, reduction in cost and reduced reliance on imported raw materials. The entire circular economy initiative is based on input...
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Now Everyone Can Try China's Great Firewall At Home
2008-10-28 08:06:00
In its post, "The Great Firewall of China : Coming to a Browser Near You," Sinosplice alerts us to a new Mozilla Firefox that allows one to "have the frustration of the Great Firewall of China in the comfort of" one's own home: The Firefox add-on China Channel offers internet users outside of China the ability to surf the web as if they were inside mainland China. Take an unforgetable virtual trip to China and experience the technical expertise of the Chinese Ministry of Information Industry (supported by western companies). It’s open source, free and easy. Click here if you wish to slow down your computer, be unable to read BBC news, have thousands of blogs blocked, and have your computer freeze fairly regularly for no apparent reason.
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Shenzhen: No Manufacturing Jobs, No Cry.
2008-10-28 06:04:00
Very interesting post on Shenzhen Undercover, entitled, "Shenzhen's Greater Plan: No Manufacturing , No Problem." Grossly summarized, put into my own words, and infused a bit with what I think is happening, the post essentially says that the reports of the death of China's economy, as evidenced by the closure of thousands of toy factories in and around Shenzhen, is greatly exaggerated. This is merely part of Shenzhen's (and China's) long term plan to move up from low end manufacturing. On the other hand, my friend David Dayton, over at Silk Road International, in his post, entitled, "So, How Does the Carnage Look from Ground Level?" says things are much worse than the media is letting on. David does an excellent job laying out the ground level things he is seeing that tell him things are bad and getting worse. Oh, and where is the ground level from which David is writing? Why, Shenzhen of course. What do you think?
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Global Chinese Financial Forum 2008. Dalian, China, October 30 to November
2008-10-28 03:53:00
The third annual Global Chinese Financial Forum will be taking place at the Dalian Expo Center in Dalian, China , from October 30 to November 1. This year’s conference will be co-hosted by ChineseWorldNet (out of Vancouver, Canada) and by the Dalian government and it will again focus on the financial side of investing in China and on Chinese companies securing equity financing from overseas. This year's conference will also have speakers on what it takes for Chinese companies to go international. Go here for the long list of excellent speakers, including CLB's own Steve Dickinson, who will be speaking at 3:00 pm on October 31 regarding the legal impediments Chinese companies face in seeking to go overseas. Steve will be speaking in Chinese, but there will be a simultaneous translation into English. Immediately following this talk, Steve will moderate a session on "Positioning Your [Chinese] Company for a U.S Capital Expansion, in English. Click here for an application to a...

Beijing Gourmand Blog: China Through The Food Door.
2008-10-27 05:33:00
There are two kinds of people. Those who hate going grocery shopping, and those who love it. I fit into the second category. I love it for various reasons. I love food. Going to the grocery store is for me what going to a stereo store is for an audiophile or going to a book store for a bibliophile. But I also like grocery stores for what they reveal. A Whole Food s executive once told me that Whole Foods chooses locations with a high level of educational attainment. So just seeing a whole foods tells you there are a lot of people with advanced degrees living nearby. But going into one will tell you a whole lot more. My "home" Whole Foods here in Seattle has a massive seafood selection. The one in my brother's Houston neighborhood has a smaller fish section, but a much larger meat section. From this I conclude that educated Seattleites eat more fish than educated Houstonians, while the reverse is true for meat. The other day, I went into "my" Whole Foods this evening...
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Reading The Tea Leaves Of China's Economy -- An Official View
2008-10-27 05:07:00
Very interesting post on the Wall Street Journal's Real Time Economics Blog, entitled, "Reading Tea Leaves: China ’s Zhou Prepares For Crisis Impact." The post is by Andrew Batson, Wall Street Journal China reporter extraordinaire, and it sets out "a few key excerpts" from a special report Zhou Xiaochuan, governor of the People’s Bank of China, delivered to China’s legislature on Sunday on ensuring the stability of China's financial system: At present the external dependence of our economy is high, so the slowdown in the global economy and the reduction that brings in external demand will inevitably have a negative impact on our economic development. … However, if the global economy slows down and international commodity prices decline significantly, that reduces the external pressure on the CPI and PPI. Recently, crude oil prices in New York fell to around 80 U.S. dollars. And international coal prices fell nearly 25% last month. This means that there is a lot of uncer...
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Go Ahead And Quote Me: $100 = 100 RMB
2008-10-25 10:02:00
Jeremy Gordon at China Business Blog is out with his latest in his emminently quotable "Don't Quote Me" series. This one is entitle, "Don’t Quote Me (On When US$100=RMB100)" and it quotes Jack Perkowski, of “Managing the Dragon” (the book and blog) on how Chinese view money. I always carry two bills with me – an RMB100 bill and a $100 bill…The point I make is that these two bills are treated in exactly the same way in their respective countries. Just as the $100 bill is the highest unit of currency that you can get in the United States, an RMB100 bill is the highest unit of currency you can get in China. When Americans look at a RMB100 bill, I say, divide by 8 and see $12.50. But when Mainland Chinese look at the same bill – and I don’t care how wealthy they are – they see what Americans see when we look at our own $100 bill. Jermey goes on to say that "anyone who has conducted price negotiations in China will know what he is talking about." So true. In ...
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Tainted China Milk Ends Up In The US. In The Courts, Anyway.
2008-10-24 07:14:00
China Hearsay (welcome back, Stan!) just posted on how parents of some Chinese children who "died or became ill after drinking infant milk formula contaminated with melamine say they will sue a subsidiary of a Chinese milk powder manufacturer based in the U.S. state of Maryland." The basis for suing in the United States is that "Qingdao Shengyuan Milk Co. Ltd., a dairy products manufacturer based in the eastern China city of Qingdao, had a Delaware-registered investment subsidiary with offices in Maryland, rendering it subject to U.S. law." The story comes from Radio Free Asia, and a parent claims to have "a Maryland-based lawyer who will represent us in this collective compensation suit.” The article then talks about how the parents are "willing to pay for the legal fees and expenses" and the parents have already been requested to "send initial legal fees" and the "U.S. lawyers were hoping for a preliminary hearing in a Maryland district court soon." China Hearsay questio...
More About: China , Courts , Ends

Caijing on China's Economy. Not Too Hot, Not Too Cold.
2008-10-22 00:10:00
Tom Orlik, a very thoughtful freelance journalist based in Shanghai, with a real bent for finance and economics, was kind enough to send me his translation of a recent Caijing (probably China 's best business magazines) article on China's economy. I liked the anlysis so much, I am running Tom's translation in full, below: China's GDP growth for 3Q08 came in at 9% yoy, down significantly from 10.1% in the second quarter and the slowest since 2004. Here are a few insights culled from my translation of Caijing's analysis (for those who don't know Caijing is like the Chinese equivalent of the Economist magazine): Weak external demand and rising input prices dented growth in industrial production and profits. An 11.4% yoy growth in industrial production in September, down from 12.8% in August, was the slowest since 2002. Growth in industrial profits in the first 8 months of the year fell from 30% yoy in 2007 to 19.4% yoy in 2008. If you strip out power producers and oil refi...
More About: Economy , Cold

China's Courts And Tainted Milk. Never The Twain Shall Meet?
2008-10-21 21:06:00
This New York Times article does as good a job of any at setting out the issues China is facing in deciding whether to allow milk taint victims to pursue their claims in court. The article is, somewhat wrongly entitled, "Courts Compound Pain of China's Tainted Milk ." It does a nice job dealing with the issues of whether China's courts are set up for these sorts of mass tort cases and also whether the rejection/acceptance of such lawsuits is being driven from Beijing or locally. I would think most Western lawyers would agree China eventually needs a system that can handle class action torts (or just mass tort cases), but the much tougher question is what it should do in the meantime.
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How To Pay Your Chinese Supplier.
2008-10-21 09:07:00
In its post, "Paying your Chinese Supplier – Know your payment terms and options in advance," SourceJuice does a yeoman like job setting out the various options for paying a Chinese supplier. The post explains the following options, and describes the risks of each: -- Advance, Cash in Advance or Cash Advance – these are known as payment in advance terms -- Telegraphic Transfer, Telex Transfer, Bank Wire Transfers – these are known as T/T or TT payment terms -- Wire and Funds Transfer Services like Western Union and Money Gram Internet payment companies like PayPal.com, Moneybookers.com, and Escrow.com -- Letter of Credit and the various options that banks offer on these instruments – these are known as LCs, L/C, or LC payment terms -- Documentary Collections like Documents Against Acceptance or Documents Against Payment – these are known as DA or DP payment terms and sometimes referred to as -- “Bills of Collection” or “Bills of Exchange” -- Open Ac...